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has the right, the Administrator has the right, he has general superintendence, direction and coordination and control of the affairs of the National Housing Agency and its constituent units. The promulgation of such rules and regulations as the Administrator deems necessary to carry out his responsibilities under this provision, and the review and approval to the extent he deems necessary of the rules and regulations made by the commissioners of the various units. I will mention that in just a moment.

Senator WILEY. Of course, what it does has already been said. It takes an organization which has life for only a definite period and makes it into a permanent organization. They then call that reorganization.

Mr. FERGUSON. That is right, and this act expressly prohibits the continuance and making permanent of a temporary organization. That was one of the reasons I think probably that Congress enacted a law in spite of the arguments that were made that it was a delegation of legislative authority.

Again we find that subsection 4 of section 5 (a) prevents—

continuing any function beyond the period authorized by law for its exercise, or beyond the time when it would have terminated if the reorganization had not been made, or beyond the time when the agency in which it was vested before the reorganization would have terminated if the reorganization had not been made.

Can there be any question but that this plan continues functions of the National Housing Agency beyond the period authorized for their exercise? We have shown that under the First War Powers Act, the existence of the functions of the National Housing Agency terminated 6 months after the end of the war and that the agencies that had been consolidated to form it at that time would assume their prewar status and functions. The attempt to convert the National Housing Agency into a permanent agency is, therefore, in violation both of the First War Powers Act and the Reorganization Act of 1945. We submit further that this reorganization plan violates subsection (6) of section 5 (a). This subsection provides that no reorganization shall provide for or have the effect of

(6) imposing, in connection with the exercise of any quasi-judicial or quasilegislative function possessed by an independent agency, any greater limitation upon the exercise of independent judgment and discretion, to the full extent authorized by law, in the carrying out of such function then existed with respect to the exercise of such function by the agency in which it was vested prior to the taking effect of such reorganization; except that this prohibition shall not prevent the abolition of any such function.

The Home Loan Bank Board under section 17 of the Home Loan Bank Act is directed by Congress to make such rules and regulations as may be necessary or proper to administer the Home Loan Bank Act and the National Housing Act under section 211 expressly directs the Federal Housing Administrator to make similar rules and regulations. They are functions given to these agencies by express acts of Congress, and are beyond question quasi-legislative functions.

This reorganization plan imposes a very serious limitation upon the exercise of these functions by giving the National Housing Administrator the authority to approve or disapprove all such regulations as may be made with the result that the real power to make regulations is transferred from the agencies created by Congress to an agency created by the President, and thus imposes a greater limitation upon

the exercise of independent judgment and discretion by these agencies than existed prior to the reorganization.

We respectfully submit that Reorganization Plan No. 1 should be disapproved by the Congress, because it is not in accordance with the terms of the Reorganization Act of 1945, and the current resolution disapproving it should be passed.

Senator FERGUSON. Do I understand that you attack this plan on two grounds: First, that it is illegal; and, second, that it is not advisable?

Mr. FERGUSON. I may have said that it is inadvisable, I do think that. I do not think it is in the interest of these agencies.

Senator FERGUSON. You told us how it would increase the administrative expenses from practically $3,000,000 to $8,000,000. You attack it then from two angles: First, that it is not advisable and is not a good thing to do; and, second, that it is in contravention of the act passed, and therefore cannot be done.

Mr. FERGUSON. That is right.

Senator HUFFMAN. Your real complaint is against the legality of it?

Mr. FERGUSON. That is right. That is the point I am trying to

express.

Senator FERGUSON. Your experience in these agencies would bring you to the conclusion that it is inadvisable for from an economic viewpoint?

Mr. FERGUSON. It certainly did not help the Federal Housing Administration, I will say that.

Senator FERGUSON. Can you answer my question: From your experience in these agencies, would you say that it was inadvisable? Mr. FERGUSON. I would.

Senator FERGUSON. You would say that from an economic standpoint?

Mr. FERGUSON. I would.

Senator HUFFMAN. If it is illegal, you need not go that far, is that not right?

Mr. FERGUSON. That is right.

Senator HUFFMAN. We will recess at this time and reconvene at 10:30 tomorrow morning.

(Whereupon, at 12 noon, the committee recessed to reconvene at 10:30 a. m., Wednesday, June 19, 1946.)

PRESIDENT'S PLANS FOR REORGANIZATION OF

EXECUTIVE DEPARTMENTS

WEDNESDAY, JUNE 19, 1946

UNITED STATES SENATE,
COMMITTEE ON THE JUDICIARY,

Washington, D. C.

The committee reconvened at 10:30 a. m., pursuant to adjournment, Senator Homer Ferguson, presiding.

Present: Senators Ferguson and Wiley.

Also present: Mr. J. G. Sourwine, committee counsel.
Senator FERGUSON. The committee will be in order.

The first witness will be Mr. Morton Bodfish, executive vice president, United States Savings and Loan League.

STATEMENT OF MORTON BODFISH, EXECUTIVE VICE PRESIDENT OF THE UNITED STATES SAVINGS AND LOAN LEAGUE

Senator FERGUSON. You may proceed,. Mr. Bodfish.

Mr. BODFISH. My responsibility is that of the executive vice president of the United States Savings and Loan League. It is a cooperative thrift and home-financing institution. There are some 3,600 of them in our organization including 48 State organizations.

Our interest is exclusively, Mr. Chairman, in plan No. 1, part V, which is the section dealing with the National Housing Agency.

In order that you understand our position, it was stated from a somewhat legal point of view by Mr. Ferguson, our Washington counsel yesterday, but we hope Congress will reject the plan for several reasons. We think it is inconsistent with the Reorganization Act, but there are also administrative and policy reasons quite in addition to the legal reasons.

Senator FERGUSON. In other words, you believe it is not advisable as well as being illegal?

Mr. BODFISH. There is a question of legality. There are standards set forth in the Reorganization Act that the reorganization plans are supposed to conform to. As we have studied this matter, we do not feel that it assists in the transition from war to peace, it does not decrease expenditures or promote economy. It does not increase the efficiency based on 4 years' experience under the National Housing Agency. It consolidates agencies with very different, and in our judgment conflicting, purposes. We feel very strongly that the promotion and operation of Government-owned housing for welfare purposes is quite a different and inconsistent function with our activities which are exclusively in the credit field in connection with the financing through. private enterprise of the acquisition of homes or the building of homes.

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Based on our 4 years' experience with the present National Housing Agency and this thing to us is just a continuation of the present National Housing Agency set-up we see no elimination or overlapping or duplication of efforts which it overcomes. The one purpose that is set forth in the act that is clearly accomplished by part V of this section is the establishing of a single head to be in charge of a number of agencies. We strongly object to a single head of these agencies for a number of reasons.

It is those reasons which I would particularly like to develop for your assistance and that of your colleagues.

For months and years, many individuals in the Federal Government who have wanted to expand the control of the Federal Government over private business and have been aggressive in the promotion of Government or socialized housing have been trying to obtain control of the private credit facilities that serve home ownership and private enterprise in the home building field.

Those credit facilities, as far as the Federal Government is concerned, or the Federal Home Loan Bank Board is concerned, which has jurisdiction over some 1,467 federally chartered savings and loan associations and 2,600 State savings and loan associations, and had the Federal Housing Administration, which, as you know, insures individual mortgages.

We have objected to and resisted this proposition every time it has been presented in any way, and before the committees of Congress in our dealings with the various governmental bureaus. We were very unhappy when the objective was accomplished temporarily in 1942 under Executive Order 9070, of the War Powers Act. We felt there was questionable legality in that order but we would say we were on the verge of a war situation and we felt it was not either good manners

nor consistent with the war effort to pursue our legal remedies and question the War Powers at that time.

Since then, however, we have had some rather definite experiences with the elimination of the five-man bipartisan Senate confirmed Board, which further convinces us that we must seek in every way we can, to have these not just administrative, but they are substantially legislative. This particular agency which has just now supplanted a five-man Board with one man and this order purports to put him under another man, the National Housing Administrator, and that has created from 125 to 150 pages of administrative law which has full controlling effect, completely, on about 1,500 institutions and more or less on an additional 2,500. It includes such broad powers as not merely to administer the acts of Congress to create this administrative law, to interpret it. We find even in this agency, now, a single man writes his own bases for conservatorship and receivership, as well as administrative law under which his field. and supervisory officials act and carries out his own law that has been made by a single man through the last creations.

For example, in the last 3 weeks, a savings and loan association on the west coast was summarily taken possession of because of infrac tions.

Senator FERGUSON. What was the name of that?

Mr. BODFISH. It was called the Long Beach Savings and Loan Association, when there was no matter of insolvency involved, and no violation of statute law nor violation of specific administrative law..

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